Things could not get much worse for English National Opera. But having lost its artistic director a month ago, and its chairman a week ago, yesterday the company managed to lose its music director - before he had even taken up his job.

Oleg Caetani, 49, was due to have started at the ENO in January. But after a meeting this week with the new artistic director, John Berry, and chief executive, Loretta Tomasi, it was "jointly agreed that Caetani will not be taking up the position of music director but will maintain an ongoing relationship with ENO as guest conductor," according to a statement.

A spokesman for the company refused to elaborate, although he said that the discussions were "amicable". A source close to the board said: "He was incredibly gracious about it and realised that the situation at ENO had changed."

Sources say that the reason for Caetani's pre-emptive ejection was the lack of time he could commit to the company - an issue that had caused concern among observers from his appointment in March this year after a 14-month search.

At the time the then artistic director and chief executive, Sean Doran, insisted that the amount of time he would spend with ENO was comparable to that devoted by his predecessors.

But it became clear that Caetani, who currently lives in Australia where he has a position as music director of the Melbourne Symphony Orchestra, could be spending as little as six weeks a year with ENO, despite the position of music director being crucial to the identity and direction of the company.

He was due to conduct the first revival of Anthony Minghella's acclaimed production of Madame Butterfly in April next year. But he could devote only two and a half weeks to rehearsals and was unavailable for one of the performances. The ENO management is currently in discussions with Caetani over whether he will now in fact conduct the opera.

He will still take on what was to be his debut production with the company, Ralph Vaughan-Williams's Sir John in Love, in March.

In the new year ENO will form a search committee, under the chairmanship of board member and BBC Proms controller Nicholas Kenyon, to find a conductor to replace Caetani. Berry and Tomasi will sit on the committee. Kenyon said: "We want to build on the extraordinary recent artistic successes at ENO to build a fantastic future for the company, and finding the right music director is a key part of that - with John and Loretta and in full consultation with the company." He praised the resilience of the company in the face of ENO's multiple management problems.

ENO will simultaneously be trying to find a successor for Martin Smith, the former chairman who resigned last week. However, it seems likely that only a conductor with nerves of steel would willingly associate him or herself with what one member of the arts community has described as a "car crash in slow motion".

The validity of Berry and Tomasi's appointments - a coronation without interview process, against Arts Council guidelines - is being questioned widely. There have even been calls for the entire ENO board of directors to step down.

Last time round, when Caetani was appointed, the American conductor Andrew Litton was also in the frame, and his name may come up again. British conductor Mark Wigglesworth was also mentioned, but has said he would not join ENO with Sean Doran in charge. That barrier, at least, has now been lifted.